Another example of a dividend company that meets all four
dividend machine criteria is profiled below.
Raytheon is unloved because they are in the defense business and we all
know that government spending on defense is under pressure. However, I do not invest based on
sentiment. I invest based on the four
criteria a stock must meet to be a dividend machine and Raytheon, RTN qualifies
on all levels.
DIVIDEND
MACHINE
|
3/22/2013
|
Raytheon
|
RTN
|
Price when profiled
|
$57.10
|
Last 4 Qtrs Earnings
|
$5.65
|
Last 4 Qtrs Dividends
|
$2.00
|
Current Qtr Dividend
|
$0.550
|
Annualized Div Yield
|
3.853%
|
No. Years Div Increase
|
since 2005
|
Debt/Equity ratio
|
0.59%
|
Raytheon, RTN announces 9th consecutive annual
dividend increase:
If you own Raytheon, symbol RTN, by April 3, 2013,
you will receive a quarterly dividend of $.55 on May 2, 2013. RTN’s new quarterly dividend is an increase
of 10 percent. Name one other
investment you own that increased your income by 10 percent.
Raytheon, dividend machine fundamentals:
Look at the above table. If you read this blog often, you are familiar
with the format. We look for companies
that make more money in earnings than they pay out in dividends. If they do not make more money than they
payout, where do they get the money to pay you?
Do they borrow it? Do they sell
assets to create the cash? In Raytheon’s
case, they simply make a ton of money.
During the past four quarter RTN earned $5.65 per share.
We look for a company that pays out substantially
more than the 10 year U.S. Treasury which pays about two percent. RTN’s annualized dividend yield based on this
most current dividend increase is 3.853 percent.
Next we income investors have to get more money
every year. As noted above, this company
has increased the dividend since 2005.
Finally we want a financially solid company. We use debt to equity ratio of less than one
or within industry standard to measure a company's financial stability. One would think Raytheon would carry a heavy
debt load after all they manufacture expensive stuff. Boeing carries a D/E of 5.11 which is five
times more than I like. Raytheon on the
other hand carries a D/E ratio of just .59.
Consider Raytheon, RTN, for the dividend portion of your
portfolio.
TheMoneyMadam
